Is your business ready for the carbon tax?

With less than four months to go to the 1 July start date of the carbon tax, Julian Mellick of Colin Biggers & Paisley outlines the four areas you need to consider to ensure that your business is ready.

There are practical steps you can take to turn the carbon tax risk into an opportunity.

It’s less than four months to the 1 July 2012 start date of the carbon tax. Here are four things you can do to make sure your business is ready.

Estimate your exposure to the carbon tax.

Pass through carbon costs where reasonable and substantiated.

Resist carbon costs that are unsubstantiated or unreasonable.

Utilise the various governmental initiatives to gain additional benefits.

Carbon tax exposure

Julian Mellick

Around 60 per cent of Australia’s carbon pollution will be covered by the carbon price. The businesses most directly affected are involved in electricity generation, natural gas retailing, mining, processing, waste disposal and transport. About 500 of these will need to purchase carbon permits or reduce emissions.

Other businesses, particularly those engaged in domestic aviation, shipping and rail transport will face, for the first time, an “effective carbon price” via increased fuel excises and reduced fuel tax credits.

Even if you don’t fall into those categories, you could be affected as carbon costs are passed downstream, particularly if you are a heavy consumer of carbon price sensitive products like electricity, gas, cement, certain chemicals and metals, waste disposal and domestic transport.

Passing on carbon costs

One potential solution is to pass on carbon costs (assuming that there is no impediment to you doing so).

If you claim price increases due to the carbon tax, you need to be sure that they aren’t overstated or based on grounds that are not reasonable and substantiated.

It is also prudent to avoid talking to competitors about carbon price adjustments because this could be regarded as anti-competitive conduct.

Resisting carbon mark-ups

Attempts to pass carbon costs on to your business should be scrutinised closely.

If they are unreasonable or unsubstantiated then you may be able to resist paying them.

To complain about attempts to pass through carbon costs unlawfully, contact the ACCC.

Government initiatives, grants and programs

It’s not all doom and gloom! Your business may be entitled to government funding, finance, tax concessions or other benefits to help invest in low pollution technologies or to be more environmentally friendly. Particular opportunities are on offer for:

manufacturers involved in activities that are emissions-intensive and trade exposed, including aluminium, steel, glass, zinc, pulp/paper, plastics and chemical manufacturing (via the Jobs and Competitiveness Program)

small businesses (by increasing the instant asset write-off threshold to $6,500 and other measures)